It usually costs less to rent a home than to own one, thanks to numerous expenses associated with homeownership. For instance, renters don't have to pay property tax or costly homeowners insurance (which is many times the cost of renters insurance). Renters pay a monthly fee to live in someone else’s property, while homeowners make a monthly mortgage payment to eventually own the property where they live. Plus, homeowners have to pay for the daily upkeep of their homes.

If you are a renter who wants to become an owner, it's important to know the costs that homeowners must cover before making your homebuying decision.

Understanding Renting vs. Homeownership

The mortgage payments owed by homeowners are just the tip of the financial iceberg. They follow the down payment🌜 you need to make to secure your loan. There are also recurring property taxes, maintenance expenses, and other costs, many of which conꩵtinue even after the mortgage is paid off.

In some situations, the lower cost of renting versus owning 澳洲幸运5官方开奖结果体彩网:may make renting the better choice. But conventional wisdom says owning your home is better than renting from someone else. After all, a home is the single most v�💯�aluable asset most people will ever have.

He꧑re is a detailed look at seven important homeownership costs to be aware of.

1. Property Taxes

澳洲幸运5官方开奖结果体彩网:Property taxes are assessed based on the current value of your home and can change over time to reflect the increase or decrease in the perceived value of your property. As a homeowner, you can 澳洲幸运5官方开奖结果体彩网:expect to pay property taxes for as long as you own the property. This tax pays for local services, such a♔s public works, government employee wages, and public school boards.

Property taxes also vary depending on the property location, so you should always investigate what those taxes are in the area. As of 2022, for example, the national average for property taxes for a single-family home was $3,201 per year, or 1.03% of the assessed value of a home. Certain metropolitan areas, including New York City and Chicago, may assess hi🍃gher taxes on property owners.

But do renters pay property taxes? Yes and no. Although the burden of property taxes falls on the homeowner, some landlords factor this expense into the monthly rental amounts they charge tenants. Some may charge a little more to pay their building and property expenses while turning a profit.

2. Home Maintenance

Homeowners can’t simply call the landlord when the appliances need to be replaced or if the hot water tank stops working. The responsibility of 澳洲幸运5官方开奖结果体彩网:home maintenance tasks, from buying a new microwave oven to ♉replacing a roof, all falls on the homeowner.

The 1% rule is widely known in the real estate and insurance industry. It states that homeowners should 澳洲幸运5官方开奖结果体彩网:budget at least 1% of their home’s purchase valu𒁃e per year toward maintenance. Therefore, if your home is valued at $300,000, you should plan to set aside at least $3,000 annually toward🎶 maintenance costs.

Other methods include the square-foot rule, which says to save $1 for every square foot of livable space every year. The 10% rule, on the other hand, dictates that homeowners should put aside 10% of their main monthly expenses, such as mortgage payment, property tax payment, and insurance payments, every month for maintenance.

3. Mortgage Interest

The amount owed in 澳洲幸运5官方开奖结果体彩网:mortgage interest throughout your loan depends on the 澳洲幸运5官方开奖结果体彩网:amortization period, the frequency of payments, and the rate and type of interest. A 澳洲幸运5官方开奖结果体彩网:fixed-rate mortgage always has the same interest rate, while an 澳洲幸运5官方开奖结果体彩网:adjustable-rate mortgage (ARM) fluctuate🌌s over ti༺me. Each has its advantages and disadvantages.

So, how muc✨h interest can a homeowner expect to pay over the course of their mortgage? Let’s say you have a $300,000 mortgage that is amortized over 30 years at a rate of 5%. In this case, you can expect to pay roughly $279,767 in interest, which is nearly equal to the cost of the 🌠house itself.

4. Home Insurance

Renters may have to pay 澳洲幸运5官方开奖结果体彩网:renters insurance, but 澳洲幸运5官方开奖结果体彩网:homeowners insurance is often much more expensive. Renters insurance typically covers the contents of a property, while homeowners insurance must account for the value of the physical structure as well. If there's a fire or natural d♕isaster, insurance often covers the remainder of the mortgage or the cost to rebuild or r꧟epair the home.

Insurance policies offer different levels of protection and coverage, and premiums can vary greatly. The national average cost of homeowners insurance was $2,601 per annum, as of March 2025. Compare this with the average $263 a year that renters paid for insurance, as of January 2025.

5. Real Estate and Legal Fees

The mere act of buying or selling a home comes with costs. The seller is generally responsible for paying the real estate fees, which typically come as a 澳洲幸运5官方开奖结果体彩网:commission. According to the National Associat𓆉ion of Realtors, agent commissions, while negotiable, tend to run about 5% to 6%. If you sell your home for $300,000, you🤡 will pay about $18,000 in commission.

Both parties must pay legal fees to cover the transfer of title. Property transactions are complex and subject to specific state and local rules, so hiring a lawyer to help𓂃 you navigate the process can be wise. Legal fees, of course, vary depending on the lawyer you choose.

According to legal technology company Clio, the national average for legal services in 2023 was $327 per hour. Of course, the actual cost really depends on the requirements and experience of the legal team, in addition to geographical location.

Real estate lawyers also charge for additional 澳洲幸运5官方开奖结果体彩网:closing costs associate𒁏d with the purchase or sale of your home, so you should always budget a bit extra.

6. Landscaping and Lawn Care

If your home has a yard, make sure you budget for landscaping and lawn care. Paying a landscaping company to care for your lawn could run you between $75-$200 per visit, according to Fixr.com.

If you choose to do the work yourself, your costs will undoubtedly be lower, but you’ll still need to consider expenses such as fertilizer, tools and maintenance equipment, tree maintenance, and seasonal plants for the garden. Although you might think it's free if you do it yourself, you need to consider the time cost of such activities as mowing the lawn and shoveling snow.

7. Homeowner Association Fees

Some developments charge a 澳洲幸运5官方开奖结果体彩网:homeowner association (HOA) fee or 澳洲幸运5官方开奖结果体彩网:condominium fee. These fees often cover external build🦋ing maintenance and landscaping costs for common areas. This minimizes the cost of any home expenses covered by the HOA fee, although these fees won’t cover any internal maintenance costs associated with your unit.

HOA fees may not cover maintenance or construction projects if the HOA doesn’t have enough money in its reserve to cover themไ. This may result in a hefty one-time cost to the owner🥃s in a development. Those in HOAs should set some money aside to cover such unforeseen expenses associated with the maintenance of their communal property.

The Bottom Line

If you are a renter, remember that your landlord pays all the expenses for your home, which means they are being factored into your rent. Other fees could include paying for an extra parking spot or the loss of part or all of your 澳洲幸运5官方开奖结果体彩网:security deposit as a penalty.

If you can make a long-term commitment to owning a home, there is definite potential to earn a prꦜofit from the sale of your property. But keep in mind that there are more expenses involved in owning a home than are immediately apparent. Just because your mortgage payments are less than your rent doesn’t necessarily mean that you’ll come out ahead in the short term.